FY SONS 2006 / Corona / Exceptions to hearsay rule > Entries in the course of business FACTS 3 On 23 Dec 1988, Nestlé and FY Sons entered into a distributorship agreement whereby Nestlé would supply its products to FY Sons to distribute to its food service outlets. FY Sons executed a deed of assignment in favor of Nestlé, assigning a time deposit of Calixto Laureano in the amount of P500k to secure FY Sons’ credit purchase s from Nestlé. Laureano also executed a special power of attorney, authorizing FY Sons to use the time deposit as collateral. On 2 Jul, Nestlé fined FY Sons P20k for allegedly selling 50 Krem-Top liquid coffee creamer cases to Lu Hing Market (Tarlac), as this was purportedly proscribed by the agreement. FY Sons paid the fine. When the same product was sold to Augustus Bakery and Grocery, another fine (P40k) was imposed for the same reason. On 19 Oct, FY Sons (through counsel) wrote Nestlé to demand damages and to complain about the latter’s breaches of their agreement and the various acts of bad faith. On 5 Nov, Nestlé sent FY Sons a demand letter and notice of termination, alleging that FY Sons had outstanding accounts of P995k~. When the alleged accounts were not settled, Nestlé applied the P500k time deposit as partial payment . FY Sons filed a complaint for damages against Nestlé, alleging bad faith (see p. 627).  Nestlé made representations of rendering support, so FY Sons was lured into executing an agreement.  FY Sons invested money, time, and effort, only for Nestlé to breach the agreement by committing various acts of bad faith.  By the agreement’s termination, Nestlé would obtain market gains made by FY Sons at the latter’s efforts and expenses. EVIDENCE FOR FY SONS Testimony of Florentino Yue, Jr.  Director and officer EVIDENCE FOR NESTLÉ Testimony of Cristina Rayos  Prepared statement of account on the basis of the invoices and delivery orders corresponding to the alleged overdue accounts of FY Sons



RTC ruled in favor of FY Sons, and the CA affirmed with modification as to the amount of damages.  Nestlé failed to provide support; it unjustifiably refused to deliver stocks; the imposition of the P20k fine was void for having no basis; Nestlé terminated the agreement without sufficient basis and in bad faith.  Nestlé failed to prove FY Sons’ alleged outstanding obligation. o Nestle’s Statement of Account showing the alleged unpaid balance is undated, and it does not show receipt thereof by FY Sons, and when, if such indeed was received. o There are no supporting documents to sustain such unpaid accounts.  Re: Cristina Rayos o She admitted that the invoices corresponding to the alleged overdue accounts are not signed, because that there were delivery orders covering the transactions. However, she did not identify the signatures on the delivery orders as the persons who received the goods for Nestlé. o She could not have identified the same, for she was not involved in the delivery, as she is only in charge of the records and documents on all accounts receivables as part of her duties as Credit and Collection Manager. ISSUE & HOLDING  WON the case at hand involves entries made in the course of business. NO. Rule 130.43 is inapplicable.  WON CA is correct in disregarding Rayos’ testimony. YES. Rayos was incompetent to testify on WON the invoices and delivery orders turned over to her correctly reflected the details of the deliveries made.

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Nestlé is engaged in the manufacture and distribution of Nestlé products nationwide. FY Sons is engaged in trading, marketing, selling and distributing food items to restaurants and food service items. The agreement expired at the end of 1989, so a renewal agreement was executed on 22 Jan 1990. A supplemental agreement was executed on 27 Jun 1990, to take effect 1 Jul. [ Areas covered: Baguio, Dagupan, Angeles, Bulacan, Pampanga, Urdaneta, La Union, Tarlac, Olongapo]

RATIO Rule 130.43. Entries in the course of business.—Entries made at, or near the time of the transactions to which they refer, by a person deceased or unable to testify, who was in a position to know the facts therein stated, may be received as prima facie evidence, if such person made the entries in his professional capacity or in the performance of duty and in the ordinary or regular course of business or duty. This provision is inapplicable because IT DOES NOT INVOLVE ENTRIES MADE IN THE COURSE OF BUSINESS.  Rayos testified on a statement of account she prepared on the basis of invoices and delivery orders which she knew nothing about. She had no personal knowledge of the facts on which the accounts were based since, admittedly, she was not involved in the delivery of goods and was merely in charge of the records and documents of all accounts receivable as part of her duties as credit and collection manager.  She knew nothing of the truth or falsity of the facts stated in the invoices and delivery orders (whether such deliveries were in fact made in the amounts and on the dates stated, or whether they were actually received by FY Sons).  She was not even the credit and collection manager during the period the agreement was in effect.  She merely obtained these documents from another without any personal knowledge of their contents. The invoices and delivery orders presented by Nestlé were self-serving. Having generated these documents, Nestlé could have easily fabricated them. Nestlé’s failure to present any competent witness to identify the signatures and other information in those invoices and delivery orders cast doubt on their veracity. Re: FY Sons’ witness Yue, Jr.  Nestlé: Yue admitted in open court that FY Sons had an unpaid obligation to Nestlé of around P900k.  FY Sons: This statement was merely in response to the judge’s question on what ground Nestlé supposedly terminated the agreement. Yue was not being asked, nor was he addressing, the truth of such ground.  SC: Nestlé is WRONG, as it took Yue’s statement out of context; cannot be considered a judicial admission. Others NESTLÉ FY Sons did not deny that it received the goods covered by the invoices and was therefore deemed to have admitted this. Termination valid because of FY Son’s failure to pay its overdue accounts, so why are we made to pay actual damages? FY Son’s documentary evidence to prove actual damages in the amount of P4.2M~ should not have been considered because FY Sons’ complaint only prayed for an award of P1M. Also, the court acquires jurisdiction over the claim only upon payment of the prescribed docket fee. SUPREME COURT WRONG; NO ADMISSION. From the very beginning, FY Sons’ position was that Nestlé concocted falsified charges of non-payment to justify the termination of their agreement. Nestlé was not able to prove that FY Sons had unpaid accounts, thus debunking the claim of a valid termination. Nestlé is also guilty of various acts which violated the provisions of the agreement. FY Sons paid docket fees based on the amounts prayed for in its complaint. It also adduced evidence to prove its losses. Had the courts awarded a sum more than the amount prayed for, an additional filing fee would have been assessed and imposed as a lien on the judgment. However, the courts limited their award to the amount prayed for.

Re: Nestlé’s pecuniary liabilities and claims  Nestlé was not able to prove that FY Sons had unpaid accounts o Nestlé is not entitled to the supposed unpaid balance o The refund of the P500k time deposit with interest is called for, since its seizure was improper  Nestlé, being at fault and in bad faith, and there being no proof that FY Sons was guilty of any wrongdoing, cannot claim moral and exemplary damages and attorney’s fees CA AFFIRMED.

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